Source: Rita Jane Gabbett, MEATINGPLACE, 10/8/13


As the furlough of many government employees continues into its second week, the impact grows on the meat industry as processors and entities like the Chicago Mercantile Exchange scramble to keep coming up with meaningful data upon which to conclude pricing transactions.

Ranchers caught in an early snowstorm in the West are also suffering from a lack of information and support from USDA field offices. In addition, people are starting to worry — whether legitimately or not — about foodborne illness tracking, as the Centers for Disease Control and Prevention had to temporarily reduce staff who monitor outbreak data streams.

Hog pricing
With USDA’s Agricultural Marketing Service no longer issuing daily price reports, Cargill is using prices provided by the private firm Urner Barry to arrive at hog purchase prices, according to spokesman Mike Martin.

Starting yesterday, Tyson Fresh Meats is offering options to hog producers that use formula-based pricing to calculate pricing for their market hogs, spokesman Worth Sparkman told Meatingplace. One alternative uses historical Urner Barry data to calculate prices; however if producers don’t wish to use that data, they may elect to negotiate pricing for market hogs.

Smithfield Foods last week used the last market close hog prices that USDA issued on Sept. 30, but in a letter to its suppliers said beyond Friday it would “evaluate market conditions to establish fair market value.” According to Reuters, Smithfield is now using daily changes in the Chicago Mercantile Exchange lean hog market close for the day of harvest to approximate price changes.

CME Lean Hog Index
The Chicago Mercantile Exchange, however, is having problems of its own. The CME announced Monday its inability to calculate the Lean Hog Index, which is used to determine final settlement value of Lean Hog futures contracts, due to the shutdown of USDA’s Agricultural Marketing Service website used to report cash price information.

CME announced if USDA price reporting of the relevant data is not available for both Oct. 11 and 14 by Oct. 15, 2013, then final settlement for October 2013 Lean Hog futures and options contracts will be calculated by using the volume weighted average price of the October 2013 futures contract for trades occurring during the two-day period of Oct. 11 and 14.

Ranchers
On Monday the National Farmer’s Union issues a statement voicing concern for livestock producers, noting a lack of government data to assess the impact of recent heavy snowfall in Colorado, South Dakota and Wyoming.

“Early estimates just in the state of South Dakota are showing losses of 15 to 20 percent of entire herds,” according to the NFU. “We are operating with limited information, as USDA offices are not collecting or receiving data. ... Ranchers do not have access to assistance with the USDA Farm Service Agency offices closed; Livestock Indemnity Program benefits are not available; and other sources of support and information are unavailable.”

USDA reports
USDA confirmed this week that it would be unable to issues Friday’s Crop Report and World Agricultural Supply and Demand Estimates report.

Traditionally, these October reports are close enough to harvest to give an early indication of how large U.S. corn and soybean crops actually were this year. This is the type of data that moves feed grain prices and gives meat companies data upon which to base their hedging decisions for future feedgrain needs.      

Foodborne illness tracking
Chris Braden, director of the CDC’s Division of Foodborne, Waterborne and Environmental Diseases, told National Public Radio the team of eight people overseeing the foodborne illness tracking database PulseNet has been reduced to three during the shutdown.

PulseNet is the computer system that collects outbreak data from state and local health departments then looks for correlations to help identify the source of foodborne illness outbreaks.

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